An Example of Strategic Positions towards Disruptive StartUPs: Digital Insurance


Technology disruptions and digital transformations are nowadays become a strategic topic in the business world and StartUPs are playing a key role as a generators of new business models.

Clouds, Mobile APPS, IoT and Analytics, together can create new business opportunities easier than few years before since they enable the creation of digital ecosystems among different industries.

As a matter of facts, most of big companies nowadays invest on Start UPs and embrace disruptions with dedicated investment fund (Seed, VC) and  Acceleration programs.

Launchpad Acceleration (Google)  and Microsoft Ventures are just an example.

So, how do big companies deal with Start UPs? Do big companies consider StartUPs as a threat or as an opportunity in order to embrace disruptions?

For each company, by evaluating its:

  • Market Leadership in the industry
  • and the Disruption Attitude towards innovations and investments in StartUPs

in the Figure below, an example applied for the Insurance Industry where are shown four strategic positions toward digital disruptions: Disruptive Leadership, Conservative Leadership, Disruption Hunter and Conservative Niche.

Disruptive_Strategic_Positions_Insurance

Disruptive Leadership

(Market Leadership: HIGH & Disruptive Attitude: HIGH)

Companies that have a proactive attitude towards disruption because they leverage theirs market leadership and resources to develop accelerator programs for Start UPs as well as dedicated Seed or VC investment founds

AXA one of the biggest insurance companies worldwide, with AXA Strategic Ventures  is the most active.

Its portfolio is well developed and wide with more than a few potential successful digital insurance Start UPs such as Policygenius and LimeLightHealth as well as with Biobeats in order to explore new businesses opportunities and ecosystems in healthcare enabled by wearables.

Other big players are filling theirs disruption leadership GAP  by investing more resources and encouraging more initiatives.

In 2015, Generali acquired MyDrive, an interesting auto telematics StartUP, and launched the first edition of Generali Innovation Challenge in order to scout “out of the box” solutions.

Meanwhile Allianz SE is strengthening  its investments by facilitating new strategic business development opportunities with Allianz Digital Corporate Ventures and Allianz Digital Accelerator.

Smaller players like Munich RE and Marsh are insted pretty active on scouting and investing early stage digital insurance Start UPs (see CB Insights Seed & A Series top Seed and A Series investors in insurance).

Conservative Leadership

(Market Leadership: HIGH & Disruptive Attitude: LOW)

Despite its leadership, Conservative Leadership companies have a reactive attitude toward disruptions ans compete in the insurance market by mainly employing its resources on “traditional” investments:

  • Agents’ Networks & Brokers
  • Dividends and Investors relations
  • M&A of developed Start UPs
  • Internal Product Development (close innovation)

Big insurance players such as Zurich, Prudential and Berkshire Hathaway Inc. do not have any signficant accelerator or investment found dedicated for StartUPs and they just M&A whenever a small companies reach a significant stage of development in terms of customer base and traction.

 For example, as United Healthcare did with Optum and others additional Mobile APP services such as Real Appeal.

So, with a Conservative Leaderships approach the market risk of disruptions its just mitigated rather than exploited.

Disruption Hunter

(Market Leadership: LOW & Disruptive Attitude: HIGH)

Despite they are not leading the market many insurance companies might invest (or speculate) on disruptive Start UPs.

Due to the limited amount of resources compared to market leaders, Disruption Hunters neither can institute accelerator programs as Disruptive Leaders do nor acquiring already developed Start UPs.

However, there is still the opportunity to scout early stage StartUPs that required a limited amount of investment at Seed or A Series levels.

Since the risk of failures at early stages is significantly high, it is also necessary to have a wide portfolio as Hub International, Confie and Arthur J. Gallegher have done in 2015.

According to CB Insights, respectively top three acquires of digital insurance StartUPs during last year.

Conservative Niche

(Market Leadership: LOW & Disruptive Attitude: LOW)

Mainly many and many SMBs or independent insurers agents & brokers that are conformable with theirs networks of loyal customers.

So, a framework for identifying the strategic position towards StartUPs’ disruptions have been just applied for the insurance market and it can be extended to other industries (Automotive, Telecommunication, Banking,…).

Concerning insurance, many companies have strengthened theirs effort and interest regarding StartUPs, maybe also because already other big players from other industries like Google have attempted to threat the insurance market (see Compare Auto Insurance recently closed).

What if insurers become comfortable with disruptive digital ecosystems? Would they threat other sectors as well?

Feel free to add any comment, thank you!

Feelink – Feel & Think approach for doing life!

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A question about IT change management: does the DNA of the company fit your IT vendor?


Company_Vendor_DNAs

When delivering my final dissertation of the MBA program (here the link of a short presentation), along the research I’ve encountered the topic of IT Change Management.

As a matter of fact, whenever a company decides to implement IT innovations most likely new collaborations or partnerships with IT Vendors, consultants or third parties are needed. Usually, within a selection process, IT suppliers are evaluated accordingly to theirs know how and proven expertise. However, what about other aspects such as the agility to change, the ability to innovate and corporates’ cultures? Is there a potential fit or a misfit between the company and the selected IT vendor?

The company’s DNA

In order to avoid failures, it’s fundamental to set a pace for IT innovations that is affordable to the company according to its DNA. According to R. Ray Wang (@rwang0) there are two kind of attitudes when defining a DNA of a company: proactive vs. reactive and incremental vs transformational attitudes.

Cautious Adopters: proactive & incremental (about 30%). Such companies are looking for new technologies without waiting what other competitors do. However, they are willing to implement only the technologies that might play a key role in the future as well as they are not keen to consider the opportunity to change their business model even if the new technology enable a breakthrough.

Market Leaders proactive & transformational (about 5%). A market leader has the ability to sustain high paces of IT innovations as well as an organizational flexibility to change also its business model.

Laggards: reactive & incremental (30%). Such a company avoid any kind of risk of a self-disruptive innovation and integrates new technology only when other competitor succeed. In any case, without transforming its business model.

Fast Followers: reactive & transformational (15%). This of kind of DNA is able to mitigate the risk of adopting new technology by relying on the ability to change quickly the business model and the organization as a way to survive against disruptive innovation threats.

(More: “The Building Blocks of Successful Corporate IT“, HBR Blog)

IT Vendor’s DNA

What about the DNA of an IT Vendor? Gartner is well-known for providing a “magic” quadrant for everything and also for evaluating an IT vendor: completeness of vision and ability to change are the two main attitudes to consider.

Leaders: high completeness of vision & high ability to execute. As IT vendors, they are able not only to provide innovative services that works today but also to influence the market that theirs innovations are the best for the future. For these reason, such IT vendors might fit best a company with a leadership that wants to invest in new infrastructures\technology early and avoiding any risk due to technology (obsolescence, maintenance, etc.). However, also a cautious adopter (DNA) company that wants to develop a leader DNA should prefer IT leaders by relying on their ability to execute and play a key role as an influencer within a change management process.

Niche Players: low completeness of vision & low ability to execute. Is the case of IT vendors specialized in few functionalities and with low ability to execute due, for example, to a lack of resources (financial, operating) and power (network). However, such IT vendors might be useful for companies that need small technology changes without stringent delivery deadlines. For these reason IT niche players might be extremely useful for Laggard (DNA) companies.

Visionaries: high completeness of vision & low ability to execute. Is the kind of IT vendor that fit best a Cautious Adopter company’s DNA. Anyhow,  a Fast Follower (DNA) company that wants to innovate proactively rather than reactively, might get some useful insights from Visionaries third parties.

Challengers: low completeness of vision & high ability to execute. Is what Fast Follower companies usually need. However, a Cautious Adopter company that wants to improve its change management process should look for Challengers as IT vendors.

(More: “How Gartner Evaluates Vendors and Markets in Magic Quadrants and MarketScopes“, Gartner)

So, which IT Vendor to chose? Thinking about possible threats due to cultural and organizational divergences between the company and th IT vendor DNAs will ensure the implementation of the strategy as well as it will avoid market\operational risks and a waste of resources: why to invest on IT Vendor Leaders? Does the company really need it?

As a moral of this story, selecting the IT Vendors that fit best the company DNA is not so different as chosing relationships and friends in our every day life. Trusted and better relationships are guaranteed only by knowing ourselves as well as the others.

Feelink – Feel & Think approach for doing life!

Firm Infrastructure Vs Catalyst to Change Business Models (part 2): New IT Innovation Development (NITID)


Value chain

Acknowledged the role of IT and technology as a catalyst to change business model (see the previous post “Firm Infrastructure Vs Catalyst to Change Business Models:  the Double Side of IT“), how to implement new IT innovations in practice?

Each innovation implies a changing process and each changing process implies commitment and investments…so, which IT innovations to choose in order to avoid a waste of resources? Are the IT innovations under development in line with the customer needs (actual or potential)? Which are the key competences needed for developing a new IT innovation?

Whatever the industry of the company is about, since the focus is customers’ needs, why not thinking how to adapt the NPD (New Product Development) process to IT innovation? The NPD is a structured creativity process focused on introducing new kind of products\services that effectively produces innovations.

In particular, the NPD process combines lateral (generations of ideas) and vertical thinking (selections of ideas) together and it is divided into four stages: ideas brainstorming, ideas classifications, ideas evaluation and ideas selection.

NPD stage 1: ideas brainstorming (lateral thinking)

In this stage all the team members engaged simply write down new ideas without any kind of filter or criticism (lateral thinking). Taking as an example the case of TripAdvisor (see “Tripadvisor: a case study to think why bigdata variety matters“) where a validation process of the reviews is in place by recording on a database the receipts of the end-user at the restaurant: which might be the new innovations available by using the data of the receipts?

NPD stage 2: ideas classification (vertical thinking) – KJ Method

Now, since usually a brainstorming session generate chaos, how to figure out which IT innovations to implement?

Like navigating in the middle of a storm, just stay focus on the ongoing  issues, do not think to a final solution and keep clam. So a first step is to organized ideas in a structure way in order to figure out a big picture. An approach for classifying the brainstormed ideas is the KJ method, where all the initiatives are split into groups by using a criteria. For example, criteria for classifying IT innovations could be: which are the departments\functions involved by the IT innovation? Or\And, which are the stakeholders (customer, suppliers, third parties,…) involved?

Then, for each group of ideas, assign a tag that identifies it. For example, suppliers IT innovation, marketing & sales IT innovations, and so on.

NPD stage 3: ideas evaluation (vertical thinking) – QFD Matrix

Once ideas are grouped and tagged, the next step is to identify the key performances that are needed in order to implement new IT initiatives. Typically, regarding IT stuff, they are about DataBase (storage, number of transactions,…), architectures, maintenance costs, usability, interoperability,…

By putting IT initiatives into rows and the key IT characteristics into columns, the finial result is a matrix called QFD (Quality Function Development). Briefly, the QFD matrix connects the IT initiative with the needed performances. For these reasons, the QFD matrix applied to IT innovations might be useful also for procurement: which are the key competences? Make or Buy? If buy, which IT vendor to choose?

NPD stage 4: ideas selection (vertical thinking) – Pugh Matrix

Just for a recap. We have organized the ideas, we have identified the key characteristics for each IT initiative… and so? Which IT initiative to implement? The answer is provided by the so called Pugh Matrix where, for the development of a new product or service, evaluates ideas and solutions according to a gap analysis. In particular, how much the new idea will be valuable for the customer? Will the new idea provide a competitive advantage against competitors?

A similar evaluation should be adopted also for IT innovation. Why? Just think about the risks correlated when IT becomes so complex to be maintained and thus a nightmare for customers, employees and suppliers as well.

Too much enthusiasm on IT initiatives has a side effect to much IT complexity. How to innovate without adding superfluous IT complexity? What about using NITID (New IT Initiative Development), a revised NPD method widely use for product innovations?

Feelink – Feel & Think approach for doing life!

Barriers to change… Should I stay or should I go? A ripped up speech


Ferdinandeo (Triest), Saturday 21st September 2013 around 12:00 a.m.: what to say as a final speech after attending an MBA program in behalf of all the class?

Here below an idea, a story about barriers to change… delivered here, in a comfortable “context”, with 10 day of delay: should I stay or should I go?

Should I stay or should I go? A story about barriers to change

Should I stay or Should I go? That was the question that each MBA participant has faced when applying for the master program in business administration here at MIB School of Management.

Should I get an MBA in my country or abroad?

The MBA class of the 23rd edition was almost equally distributed: 60% foreigners and 40% Italians. Who made the right decision?

Nobody knows… now!

Anyhow, what all the participants of the 23rd edition have in common, both foreigners and Italians, is that they have started a changing process in a way:

someone changed country, some other quit a job and somebody did both.

Was that easy? Of course it was not!

Why? Because each change requires a transformation process, and each transformation process requires resources:

physically, mentally and emotionally.

So… which are the barriers to change? I would say mainly three:

unawareness, laziness and conservation of the status quo.

The first one, unawareness, means that since I don’t know there is a problem, why to invest resources for a change? How to start a changing process in such a situation? Simply by creating awareness: “Houston, we have a problem!”

The second one, laziness, I know there is a problem but it requires too much resources: physically, mentally and emotionally. In this case the therapy is defining an objective that is attractive enough in order to justify the effort.

The third one, conservation of the status quo, is the toughest: I do know there is a problem and I do not want to change since I feel myself comfortable in the current situation. I am not sure… in this case uncertainties about the current situation and status quo will establish a changing process.

Why uncertainties? According to a passage taken from a speech held here in this hall few months ago: “Since the economy is not growing in Europe and in the Western counties, the only alternative for getting good jobs is to go abroad where the economy is booming”

So… should I stay or should I go? According to this story, I would say: it depends!

It depends on how much uncertain and uncomfortable you are with your current situation and status quo… unless new innovative opportunities and unconventional alternatives will be created from scratch.

All the best for the MBA23 and MBA24 classes!

Thank you!

The story was slightly different and this speech has not been delivered because the “context”, the final ceremony for the MBA23 class, was not comfortable for the speaker.

How to break such a uncomfortable situation? …well, you already know the moral of the story: by creating uncertainties through innovative and unconventional alternatives!

Feelink – Feel & Think approach for doing life!

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Firm Infrastructure Vs Catalyst to Change Business Models: the Double Side of IT (Change Management)


 Value chain_0

Technology improvements, such as mobile devices with embedded GPS, RFID, WiFi receivers that are becoming cheaper and cheaper, are enabling new business opportunities as well as new threats arising from disruptive innovations.

Few weeks ago I saw a video from MIT Sloan “Video: What Digital Transformation Means for Business.“. A meaningful and for me inspirational chat with Kim Stevenson (Intel Corporation, @Kimsstevenson), Mark Norman (Zipcar), Didier Bonnet (Capgemini Consulting) and Andrew McAfee (MIT Center for Digital Business, @amcafee) about how technology and IT are nowadays impacting businesses. Booking a flight and see its status in real-time or check the bank account are nowadays common consumer habits thanks smartphones and apps, while few years ago that was something beyond imagination.

IT is a catalyst to change business models

If I have to chose a slogan that summarize the video from MIT, I would pick up the words “Nowadays IT is a catalyst to change business models” (by Kim Stevenson and Andrew McAfee). Many cases have shown how technology impacts business by redefining how  services\products are delivered to customers.

Side 1 of IT: process automation

Anyhow, what is IT for a company nowadays? According to the value chain model (see Figure), IT is firstly part of the firm’s infrastructure. When IT plays this role, the objective is to automate standardized processes that are in place within a fixed business model. For example, Operation Support Systems (OSSs) to support operation and inbound\outbound logistic, Customer Relationship Management (CRM) or other administrative functions such as managing payrolls (HRM).

Since the business model is fixed and procedure standardized, when IT is consider as part of the infrastructure, technology advancements might create new opportunities for improving efficiency: do the same with less. For example, new cheaper hard disks and CPUs available in the market that means opportunities to store\process more data.

Side 2 of IT: customer needs and value creation

However, what happen when IT plays the role of a catalyst to change business models? In this case technology advancements might open new approaches for delivering the product\service to customers or even generate completely new customer’s needs. Can you imagine your life now without a WiFi connection? (see a revised version of Maslow’s pyramid model). WiFi connection plus cheaper smart phones are a meaningful examples about how technology might change business models and re-define customer’s needs as well.

Anyhow, generating new needs and changing business model also implies operating with not standardized procedures.

Standardization Vs Innovation: How to manage the double side of IT?

Thus, how to manage together the two opposite sides of IT? One side that standardize procedures and the other that defines new ones?

Moreover, how to bring only IT innovations that really generate value to customers? How to identify the key competencies and resources that are needed as input for the new business model?

In the video of MIT Sloan Leadership skills and M&As might help organizations to handle impacts coming from new technology advancements in order to acquire key competencies as well as avoiding disruptive innovations threats.

Best practices apart, is there a framework that brings together all the aspects of change management also for IT? I mean, is it possible to evaluate customers’ needs, key resources\copetencies, value creations and strategy threats\opportunities as a whole? Moreover, how to control the IT complexity by focusing only on new IT initiatives that really matter?

Big challenges for IT change management, especially considering that nowadays technology breakthroughs are faster and more impacting than in the past.